Merrill Lynch Lowers Ad Growth Forecasts

Citing pressure on advertising rates in traditional media and potential weakness in the automotive and entertainment industries, a Merrill Lynch analyst lowered her 2005 U.S. ad spending growth estimates yesterday to 3.2 percent from previous forecasts of 3.7 percent. However, direct mail is a bright spot.

If direct mail were taken out of the estimates, securities analyst Lauren Fine said, ad growth for the major media would be just 2.3 percent.

For 2006, Fine cut her estimate from 5.2 percent to 4.5 percent.

"If realized, our 2006 forecasts would imply a second consecutive year of underperformance of ad spending relative to GDP growth, despite the expected influx of political and Olympics advertising next year," Fine is quoted as saying on MarketWatch.